Tuesday, July 25, 2017

Making the case for universal basic income (UBI) has always required advocates to address two criticisms of the idea:

1. Giving people cash will cause them to work less, hurt the economy, and deprive them of the meaning that work provides in life.

2. Providing an income floor set at a reasonable level for everyone is unaffordable.

Call these the work critique and the cost critique. (...)

Let’s take the work critique first. University of Chicago economist Ioana Marinescu recently conducted a wide-ranging review of the literature on unconditional cash programs for the Roosevelt Institute, focusing on programs in the US and Canada. She examined experiments in the 1970s and ’80s that evaluated “negative income taxes” (NITs, essentially basic incomes that phase out as you earn more), Alaska’s Permanent Fund (which taxes oil extraction and returns the money directly to every man, woman, and child through an annual check), and a dividend the Eastern Band of Cherokees issued to members of the tribe from casino revenues.

All of these cases find reductions in work that are, at most, modest. (...)

The cost critique is even simpler than the work critique. (...)

In an absolute must-read paper for anyone interested in the basic income debate, the University of Michigan’s Jessica Wiederspan, Elizabeth Rhodes, and Luke Shaefer estimate the cost of the US adopting a negative income tax large enough to wipe out poverty. To be conservative and get a high-end cost estimate, they assume that such a program would discourage work substantially.

Despite that, they find that a household-based negative income tax, set at the US poverty line and with a 50 percent phaseout rate, would cost $219 billion a year. That’s almost the same as the combined cost of the earned income tax credit (which supports the working poor), Supplemental Security Income (itself basically a negative income tax but only for the elderly and disabled), food stamps, cash welfare, school meal programs, and housing subsidies. You could swap those programs out, put a guaranteed income in their place, and wipe out poverty entirely.

Basic income advocates like to talk in effusive terms about the idea’s cross-partisan appeal, how it unites radical Marxists like André Gorz and libertarians like Milton Friedman and American heroes like Thomas Paine and Martin Luther King Jr. They speak of its radical potential to remake society, and position it as an inevitable and necessary response to an incoming torrent of technological change. (...)

You can’t assume away politics, though. And when you take a look under the hood of major plans from basic income advocates, the politics begin to look daunting. The coalition between left and right evaporates, the idea’s economic inevitability looks fanciful, and the promise that the plan could end poverty forever looks more dependent on technical details than you might think. (...)

We have gone through large automation shocks before; are self-driving trucks really a bigger step than, well, trucks were? And if trucks and washing machines and all the other labor-saving inventions of the 20th century didn’t put anyone permanently out of work, but instead shifted the kind of work that was being done, why would we think matters would be any different in the 21st century? Why could the laundry workers of the 1940s find new jobs but the truck drivers of the 2020s can’t?

The populist backlash may have been predictable, but the specific form it took was less so. Populism comes in different versions. It is useful to distinguish between left-wing and right-wing variants of populism, which differ with respect to the societal cleavages that populist politicians highlight and render salient. The US progressive movement and most Latin American populism took a left-wing form. Donald Trump and European populism today represent, with some instructive exceptions, the right-wing variant (Figure 2). What accounts for the emergence of right-wing versus left-wing variants of opposition to globalization?

Under this system, poor but gifted students would receive full funding and maintenance. There would be no means testing. Outside the top 10-12 per cent of students, all that the state would really be doing would be addressing liquidity issues. There would be state support only for the top 35 per cent of students.

We can afford to fund higher education to a much greater extent, but only if we do so by focusing that funding on a much smaller group of students — the most gifted being the most appropriate group to focus upon.

That does not mean that only 35 per cent of students would attend. Others would doubtless attend, funding themselves from parental resources, private sector loans or extra jobs.

1 The Externality Argument – Higher education delivers benefits to society as a whole in addition to those benefits experienced by the student herself. That means a pure market is likely to under-provide higher education (fewer people will go than is best for society).

2 The Liquidity Argument – People will gain the most from higher education if they attend when relatively young, when their minds are most flexible and they have longer post-education to reap its rewards. But early in life people will not have been able to establish a track record with banks and other lenders, and so may find it difficult to obtain loans against their future human capital improvements.

3 The Glory Argument – Once we had kings, dukes, and other Great Men of the past who acted as benefactors and promoters of art and research and other goods provided through universities. Modern governments tend to tax away much of the surplus wealth that Great Men used in this way (for other socially important programmes such as health and income support). That means there would be a loss from reduced philanthropy if the government did not at least replace the philanthropy of these Great Men.

Higher education obviously provides other important social functions, but these are not good reasons for government intervention in it. For example, one of the main purposes of higher education is as a “consumption good” — the university life, with its freedom of thought, bonding experiences and general fun is a great thing to be part of. But things we enjoy doing and benefit from are usually best paid for by us, not the government.

Similarly, much is made of the benefits of education in preparing students for working life in a modern economy — that it is an investment with a high personal return. In which case, people will be more than willing to invest and government intervention will not be needed.

There’s Duck Dynasty America and Modern Family America. There’s“gosh” America and “dope” America. Sometimes, though, Americans unite around a common idea. Like the healing powers of eleuthero root, cordyceps mushrooms, and “nascent iodine.”

Near the end of a profile of Amanda Chantal Bacon, founder of the “wellness” brand Moon Juice, the New York Times Magazine noted that many of the alternative-medicine ingredients in her products are sold—with very different branding—on the Infowars store. That’s the site run by Alex Jones, the radio show host and conspiracy theorist who has saidthat both the shooting at Sandy Hook Elementary School and the Boston Marathon bombing were staged. Moon Juice is frequently recommended by Gwyneth Paltrow’s wellness blog, Goop; it’s a favorite of Hollywood celebrities and others who can afford things like $25 “activated cashews.” Infowars, on the other hand, is a dark corner of the American right, heavy on guns, light on government intervention, and still very mad at Obama.

We at Quartz have created a compendium, from Ashwagandha to zizyphus, of the magical healing ingredients both sides of the political spectrum are buying, and how they are presented to each. We looked at the ingredients used in products sold on the Infowars store, and compared them to products on the wellness shops Moon Juice andGoop. All make similar claims about the health benefits of these ingredients, but what gets called “Super Male Vitality” by Infowars is branded as “Sex Dust” by Moon Juice.